Gannett’s unsolicited bid to acquire Tribune Publishing got more personal Friday, with each company calling out the other’s top executives by name and questioning management’s decision-making.
In a Friday letter to Tribune Publishing shareholders, Gannett reported that Tribune Publishing Chairman Michael Ferro said during a May 12 meeting in Chicago that while a merger could make sense, he wanted a “significant role” in the company post-closing and he was unwilling to engage in the process unless he got “a piece of the action.”
The letter urged shareholders to “protect their investment” by withholding votes to elect Tribune Publishing’s board at the company’s June 2 annual meeting. The largely symbolic proxy campaign is intended to send Tribune Publishing a “clear and coordinated message” to immediately engage in negotiations with Gannett, the letter stated.
Tribune Publishing responded to Gannett’s letter with a news release Friday afternoon that took issue with Gannett Chairman John Jeffry Louis and CEO Robert Dickey, who met with Ferro last week.
On Monday, Gannett boosted its all-cash offer to acquire Tribune Publishing to $15 per share, raising the stakes after the Chicago-based owner of the Chicago Tribune, Los Angeles Times and other major newspapers earlier this month rejected an unsolicited $12.25-a-share bid.
The revised offer values the company at $864 million, including the assumption of $385 million in debt, and represents a 99% premium to the price Tribune Publishing stock was trading at before Gannett made its initial offer public on April 25.
Tribune Publishing’s board, which adopted a “poison pill” defense May 9 to discourage Gannett from going directly to shareholders with a tender offer, has yet to respond to the increased offer, according to Gannett’s letter Friday.
“Notwithstanding the fact that Gannett continues to engage in the reckless use of false and misleading comments about the meeting between the companies on May 12 ... our board is in the process of dispassionately, thoughtfully and thoroughly reviewing Gannett’s latest proposal and will respond to it in short order,” Tribune Publishing said in its statement.
Ferro became Tribune Publishing’s largest shareholder in early February when his investment firm, Merrick Media, bought a 16.6% stake in a $44.4 million deal that priced the stock at $8.50 per share. He subsequently donated his ownership stake in the Chicago Sun-Times to a charitable trust to avoid perceived conflicts of interest.
In Friday’s letter, McLean, Va.-based Gannett, publisher of USA Today and more than 100 other newspapers, discounted Tribune Publishing’s recently unveiled digital strategy as “unproven,” and questioned Ferro’s publishing track record, calling him an “ineffective operator” when he owned the Sun-Times. Tribune Publishing’s second-largest shareholder, Oaktree Capital Management, a Los Angeles-based investment firm that owns 14.8% of the company, sent a letter to the board Wednesday urging the company to negotiate a transaction with Gannett.
Robert Channick writes for the Chicago Tribune.
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